Houston Strategies

Wednesday, April 27, 2011

Megabus undermines high-speed rail

Business Week recently had a feature article on "The Megabus Effect" and how these new cheap luxury intercity bus services are not only extremely popular and growing like crazy, but also deeply undermine the case for spending tens of billions of dollars developing high-speed rail for this country:

He immediately begins detailing the company's merits: how 90 percent of customers book online, many simply showing tickets texted to their phones to board; how the buses all offer free Wi-Fi and power outlets at every seat; how every trip includes at least one $1 fare, with prices going up as the departure date nears and as the bus fills; how there are no terminals or storefronts, just a bare-bones back-office staff; how the bus fleet is in constant use. "You cut all that overhead out of your business, you find you can pass that savings on to customers, thus driving volume.

....

There's a battle going on to control the in-between routes, the 200- to 300-milers. Air travel, despite its enormous carbon footprint (and meager profitability), is unlikely to be displaced anytime soon as the transportation of choice for long-haul travel. For short distances, the car is still king. But of the most traveled American routes, many fall into this middle category: New York to D.C. (or Boston), Los Angeles to Las Vegas, Chicago to Detroit (or St. Louis), Dallas to Houston (or Austin or San Antonio), Miami to Orlando, Nashville to Atlanta (or Memphis). These routes are too far for a leisurely drive and too near for most Americans to justify the expense, or increasing hassle, of a plane. In 1990 a third of Americans flying domestic traveled these medium-haul distances. By 2009, though, that portion had shrunk to a quarter of all fliers.

In Europe, these are the routes owned by rail, and transit policy experts in the U.S. hope that in coming decades high-speed rail will serve that market. But it's the intercity bus, the tortoise of the transport world, that is taking over much of the medium-haul market. On most city-to-city trips under 300 miles, the curbside bus offers tickets that cost a tenth of those of Amtrak and far less even than the price of the gas to get there by car. The bus is also at least four times more fuel-efficient than a car. Researchers at DePaul University's Chaddick Institute for Metropolitan Development estimate that curbside carriers, at their current capacity, already reduce fuel consumption by 11 million gallons annually, the equivalent of taking 24,000 cars off the road.

Much of the recent success of the curbside business derives from its nimbleness. In February the Obama Administration unveiled some specifics of its long-term plan for high-speed rail, requesting $53 billion over the next six years to build and upgrade intercity service—a proposal that has already met opposition. By contrast, the bus simply uses existing roads, requiring no policy debates, government funding, or land management studies. It needs only a curb and a sign. Bus companies are also able to gauge demand quickly, gather rider input online, then alter pickup locations or routes just by posting changes to their websites. While we're having coffee, Moser explains that since he's seen numerous requests on transit blogs for new service from Chicago to Memphis, he figures he might as well give the route a try. A couple of weeks later he has the buses up and running.

The curbside bus can also easily add and subtract departures. During Thanksgiving and Christmas in 2010, Megabus continued to sell as many tickets as were requested on its website, adding buses as needed. In Chicago, the buses were lined up all the way around the corner at the pickup location. "It's astounding how few constraints there are to its development and expansion," says Joseph Schwieterman, the director of DePaul's Chaddick Institute. "That's why it's an exciting product to watch. Adding two big hubs in six months—we just don't see that anymore in transportation."

The comparison with rail is revealing. Consider that even after the Obama Administration budgeted $10.4 billion in federal stimulus money to jump-start high-speed rail projects around the country, the states had to submit proposals, federal transportation officials had to select the most viable ones, and state and federal governments had to negotiate these plans with the freight companies that own most of the nation's track. After all that, politicians, citing budget shortfalls, ended up scuttling many of the plans.

The growing prevalence of portable electronic technology, such as laptops and cellphones, gives intercity bus a new competitive advantage over air service and driving. At randomly selected points,we estimate in our analysis of traveler use of technologythat more than 40% of passengers on curbside buses are equipped with portable devices, a percentage higher than on Amtrak (perhaps due to the free Wi Fi) and much higher than on commercial airplanes. Customers who place a premium on their ability to access electronic devices apparently find curbside bus service a particularly attractive option.

Both BW and NG predict Texas service in the near future, although I have not heard of any specific plans. The Houston-DFW-Austin-SA triangle is an obviously huge candidate right in the optimal range for this sort of service. Still a chance for a new operator to slip in and grab the market before the big guys get here. How would they compete? My suggestion: Give it strong Texas branding (like HEB does) and partner up with Buc-ee's for rest stops. In fact, put that beaver logo on the bus! How's that for a powerhouse brand? They'd lock the market up. You heard it here first. If somebody does it, I want a commission, dammit! ;-)

Tuesday, April 19, 2011

Houston tops growth, Energy Capital, bike lanes, and more

Got to clear out a stack of smaller misc items this week:

Houston #1 for population added and #2 for jobs added in the last decade, just behind, you guessed it, Washington DC and our insatiable, ever-expanding federal government. What I can't understand from the table is how all of these metros like DFW (+12 people for every job added) and especially Atlanta (a million people added but negative 30k jobs) add so many people without proportional employment increases. Very confusing. What are all these new people doing? Hypotheses behind this dynamic welcome in the comments.

Friday I also attended the Mayor's State of the City address, which went well. Nothing too new that we weren't already aware of, but it was nice to hear a complete summary of all of the past and upcoming initiatives. Mayor Parker had a great zinger line that got a laugh from the audience: "A tight budget is like a corset - it holds some things in and emphasizes others!" Coverage: full text, Chronicle, Kuff.

P.J. O'Rourke amusingly goes after urban cyclists and their dedicated lanes in a Wall Street Journal essay. I generally support bike lanes as long as they don't remove traffic lanes (narrowing is usually ok, but dropping Westpark from 4 lanes to 3 is not - esp. when it would have been trivially easy to put an bike lane on the adjacent power line right-of-way), but this is funny enough I can't help but pass it along: Dear Urban Cyclists: Go Play in Traffic

A pass-along that I thought might be of interest to my readers: a new iPhone app called PIM lets you find, reserve, and pay for your parking spots across the US, Canada and Europe, and also gives the driver occupancy information in certain locations in real time. It contains more than 250 locations in Houston alone, complete with rates, hours of operation, and other useful info.

New Geography has an interesting essay, "The Evolving Urban Form: Dallas-Fort Worth", much of which could also be applied to Houston (although we have a healthier core city than Dallas). Here's one Houston-related stat indicated how strongly we're growing vs. other large cities not just in the U.S., but around the globe:

"On an international scale, the United Nations estimates indicate that only Singapore, Houston and Atlanta had greater percentage growth between 2000 and 2010 among high-income world urban areas that exceed 4,000,000 in population."

Wednesday, April 13, 2011

The upside of not getting a space shuttle

Not surprisingly, there has been much gnashing of teeth about Houston being denied a retired space shuttle to exhibit. And as a Houstonian, I'm certainly disappointed. But let's step back a bit and understand the logic of the decision and even the upsides for Houston.

First, and most obvious, Space Center Houston won't have to spend the required tens of millions of dollars to exhibit the shuttle, which would have certainly boosted ticket prices and possibly even cut attendance by price-sensitive families.

Second, Space Center Houston already has a complete mock-up of the cockpit and nose of the shuttle, and JSC has a mock-up of the entire shuttle that I believe is part of the tour. I accept that's not the same as a complete, real one, but if kids (and adults) want to learn about the shuttle, we're certainly not lacking of exhibits in that department.

Third, would the boost to tourism really be all that large? If people are interested in space, they're going to visit Space Center Houston - even if only to see an awe-inspiring Saturn V rocket. I can't imagine many people blowing it off simply because it lacks a full-size, real, retired space shuttle. The whole, comprehensive package of exhibits is an impressive draw as-is. On the margins, people will choose to either visit SCH or not, and a space shuttle - or lack thereof - won't change the decision.

Fourth, let's not forget that the most important thing that NASA - and therefore JSC and Houston - needs is public support. If the citizens don't support it, it's not going to get the resources it needs to survive and thrive, and that support has been flagging in recent years. We need these shuttles to be exposed to the absolute maximum number of people possible, including the next generation of kids. NYC, DC, LA, and Florida do that (and they are willing to spend big money on spectacular displays). NYC and LA are the two largest metros in the country (by far), and will attract hundreds of thousands of visitors from both coasts and across the country. The DC Smithsonian is a no-brainer, and will generate huge exposure. And while the Midwest is complaining loudly about not getting one, let's face it: almost everybody in the Midwest goes to Florida on a regular basis every winter. If they want a chance to see a shuttle, they're certainly going to get it. And let's get realistic ourselves: most of the citizens of this country are going to visit NYC, LA, DC, or Florida long before they ever put Houston in their vacation plans. We're a great city, but let's not fool ourselves that we're a national tourist destination (but at least we're not Dayton, Ohio! ;-)

Yes, it's still a bit disappointing. But viewed in context, it's just not that big of a deal, and could even yield some long-term benefits for NASA, JSC, and Houston. And isn't that what we all really care about?

Tuesday, April 05, 2011

Winter 1Q11 Highlights

It's time for the Winter 1Q11 quarterly highlights post. These posts have been chosen with a particular focus on significant ideas I'd like to see kept alive for discussion and action, and they're mainly targeted at new readers who want to get caught up with a quick overview of the Houston Strategies landscape. I also like to track what I think of as "reference posts" that sum up a particular topic or argument; and, last but not least, they've also been invaluable for me to track down some of my best thinking for meetings or when requested by others (as is the ever-helpful Google search).

Don't forget we offer an email option for the roughly once/week posts - see the Google Groups subscription signup box in the right sidebar. An RSS feed link is also available in the right sidebar. As always, thanks for your readership.

And don't forget the highlights from the first few years. For what it's worth, I think the best ideas are found there, often in the first year (I had a lot "stored up" before I started blogging) and most definitely in the 5th birthday retrospective.

About Me

Social Systems Architect and entrepreneur with a genuine love of my hometown. I cover a wide range of topics in this blog - including transportation, transit, economic development, quality-of-life, city identity, and development and land-use regulations - and have published numerous Houston Chronicle op-eds on these topics. I'm a Founding Senior Fellow with the Center for Opportunity Urbanism and co-authored the original study with noted urbanist Joel Kotkin and others, creating a city philosophy around upward social mobility for all citizens as an alternative to the popular smart growth, new urbanism, and creative class movements. I am a native Houstonian, 6th-generation Texan, attended Rice University for my BSEE and MBA, and a former McKinsey consultant and adjunct faculty member with Leadership Houston. I am currently the founder of Coached Schooling, pioneering a transformational new approach for a more effective and engaging 21st-century K-12 education combining the best elements of eLearning, home and traditional schooling. CONTACT EMAIL: tgattis (at) pdq.net - send me an email if you would like to receive these posts via email, or see the Google Groups signup box below.